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6. Debt Management and Debt Consolidation Plans
If your financial problems have grown from too much debt or your inability to repay your debts, a credit counseling agency may suggest that you sign up for a debt management plan (DMP). Only enroll in one of these plans after a certified credit counselor has thoroughly reviewed your financial situation, offered you detailed advice on money management, and determined that this is the best debt consolidation tactic. Only make payments into your DMP when your creditors have accepted you into the program.
When in a DMP, you work towards debt consolidation by depositing money every month with the credit counseling organization, which uses your deposits to pay your unsecured debts. Your credit counselor should estimate how long it will take to complete your DMP and ask if you are permitted to apply for or use additional credit while you are enrolled in the DMP. It is important to know that even with regular, timely payments; your DMP could take more than four years to complete.
7. Debt Consolidation
Acquiring a second mortgage or a home equity line of credit may be attractive debt consolidation options as well. These loans can help lower your cost of credit and might result in unique tax advantages. However, you risk losing your home because you are putting your home up as collateral. So it is very important to not make late payments or fail to make them at all. In addition, not only do you have to pay interest on these loans, but you might have to pay “points.” One point is equivalent to one percent of your borrowed amount, and these fees add up over time.
8. Bankruptcy
Personal bankruptcy should be a last resort in debt management and debt consolidation. If and only if you have exhausted all of your other options, you can declare bankruptcy. This gives you a court order saying you are no longer responsible for paying off certain debts. On the other hand, bankruptcy information remains on your credit report for 10 years. This can be a major roadblock in obtaining credit, purchasing a home, securing life insurance, or even getting a job.
Debt consolidation may seem like an overwhelming task, but you have to be proactive if you want to get your finances in order. No matter how bad your financial situation is remember there is hope. There are a number of realistic ways to improve it, or at least to make sure it does not get any worse and begin your debt consolidation. Use this information as a guideline for getting back on the right financial path and take your first step towards debt consolidation today.
Article Source: David J. Riklan – www.ezinearticles.com
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